Mining Projects to Begin Production Despite Uncertainty

A new mining project has announced it has already started production in Mexico, while seven more are expected to do so within two years. Despite Mexico’s uncertain environment and a drop in investment and production numbers, the industry continues to advance.

Mexico ranks among the Top 10 producers of 17 minerals, being first in silver, second in fluorite, sixth in zinc, seventh in salt, eighth in copper and ninth in gold. In 2018, however, investment in the mining sector hit a 12-year low. The fall in investment has been mainly attributed to López Obrador’s administration, which has placed the granting of new mining concessions on hold. Companies with permits received during previous administrations are waiting and putting projects on hold with the hope of better tax and exploration fees. In addition, the energy reform and the Mining Law Reform have generated great uncertainty for companies and investors in Mexico. 

In 2022, FDI in the mining sector in Mexico plummeted to US$1.603 billion, 66.5% less than what was registered in 2021, according to the Ministry of Economy. Experts say that while government stances continue to impact the industry, high inflation and the global economic slowdown also affected the arrival of new investment. 

Despite the lingering uncertainty, long-awaited projects have announced that they will soon start production. These include the Juanicipio project, of Peñoles and MAG Silver; Tahuehueto, of Luca Mining; Buenavista Zinc and El Pilar, of Grupo México; Cerro Caliche, of Sonoro Gold; Terronera, of Endeavour Silver; Cordero, of Discovery Silver, and Media Luna of Torex Gold.

Juanicipio
MAG Silver owns 44% of the Juanicipio project, located in Zacatecas, while 56% is owned by Fresnillo. On June 1, 2023, MAG Silver and Fresnillo reached commercial production at Juanicipio. With this achievement, the company processed 377,018t of ore, grading 498g/t silver. In 2Q23, the project produced 5,275Moz of silver, 10,639oz of gold, 3,402t of lead and 5,418t of zinc. MAG Silver recently reported that the Juanicipio project had a transformational quarter in 2Q23, achieving a 134% increase in silver production compared to 1Q23. The company explained that the increase was due to the mine's entry into commercial production and an increase in its milling rate.

Tahuehueto
Luca Mining, formerly Altaley Mining, reported that its Tahuehueto project, located in Durango, continues to progress as planned. The US$27.5 million project expects to reach an installed capacity of 1,000t/d by the end of 2023. However, commercial production is expected to start in 1Q24. "First phase production levels will exceed 40,000oz AuEq/y," the company said in a statement. “At Tahuehueto, we are targeting commercial production of 1,000t/d by the end of the year. We have reserves and resources to grow organically. We also plan to do a feasibility study by the end of 2024, which will show that we are producing that 1,000t/d. This will put us on the map in front of investors and the market, demonstrating that Tahuehueto is a great mining opportunity,” Ramón Pérez, President, Luca Mining, told MBN.

Buenavista Zinc 
Grupo México reported that its US$416 million Buenavista Zinc project in Sonora is 99% complete. The project is in the startup process, which was planned to be completed in 4Q23. However, it has been postponed to 1Q24 due to technical adjustments. The company reported that it expects to produce 100,000t/y of zinc and 20,000t/y of copper. "When operational, this facility will double zinc production capacity and provide more than 2,000 jobs on the operations front," Grupo México said.

Cerro Caliche 
Sonoro Gold, owner of Cerro Caliche in Sonora, recently submitted its technical report for the preliminary economic assessment (PEA). The company expects to start operations in August 2024 at Cerro Caliche, which has a nine-year open-pit mining feasibility.

“I am very committed to transitioning Sonoro from mine developer to gold producer, so this transition phase is sometimes seen as a good opportunity for investors. Our strategy remains constant: get into production to create cash flow so that we can organically fund further exploration and drilling campaigns to expand the company, while minimizing dilution,” said John Darch, Chairman and Director, Sonoro Gold.

Terronera 
Endeavour Silver said it considers Terronera, located in Jalisco, as its next major asset. According to feasibility studies, the project has the potential to host high grade silver and gold mineralization with an estimated production of over 3.3Moz of silver and 32,874oz of gold per year for 12 years. The company announced that the project remains on budget and on schedule to start production in 4Q24. "Not only did we complete the installation of our permanent camp to accommodate our entire workforce, but we have made significant progress on the construction of our beneficiation plant," said Don Gray, COO, Endeavour Silver.

El Pilar 
Grupo México said that its US$310 million El Pilar mine, located in Sonora, remains on track to start operations in 2025 and is expected to have a mine life of 13 years. "Results on the pads in the leaching process confirm that there are adequate levels of copper recovery and different options are being evaluated to improve it. The basic engineering study has been completed and the company continues to develop the project and carry out on-site environmental work and activities," said the company in a press release.

Cordero 
Discovery Silver, owner of the US$455 million Cordero project, located in Chihuahua, announced that its feasibility study continues to advance and is expected to be delivered in 2024. According to BNAmericas, the project is expected to start production in 2025. Current results demonstrate exceptional metallurgical characteristics at Cordero, confirming its potential to become one of the world's largest silver producing mines, said Tony Makuch, CEO, Discovery Silver. He added that the program has also established that the 18-year mine life previously envisioned in the pre-feasibility study can be extended.

Media Luna
Torex Gold's US$875 million Media Luna project, located in Guerrero, was 49% complete in 3Q23. The company reported that the first concentrate is expected to be achieved by the end of 2024, while commercial production is expected by 2025. Torex reported that Media Luna is expected to produce 170,000oz of gold, 21,000t of copper and 1.7Moz of silver annually. "The Media Luna project is now at the halfway point and is on schedule and on budget. With continued strong cash flow from El Limon-Guajes and a healthy balance sheet with strong liquidity, we remain well positioned to execute the remainder of the development plan over the next 15 months," said Jody Kuzenko, CEO, Torex Gold.